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So the assumption is they take the hit of 250% and just keep providing the US with these unique drugs when the US is "only" at max 20% of the total market? Afai

by herbst 1y ago

So the assumption is they take the hit of 250% and just keep providing the US with these unique drugs when the US is "only" at max 20% of the total market? Afaik even less the more specialized drugs get. Edit:// it's not just me. Swiss media does barely seem to understand anything anymore either

croemer 1y ago
A monopolists can set prices however they want (in contrast to competitive supplier of commodities where there's a market price). They want to maximize profits and if marginal cost of sale is negligible (as is the case for patented drugs) the optimal price is determined by the demand curve. The demand curve depends on the price the buyer sees including tariffs. So the price post tariff is the same as the price without tariff. The monopolist absorbs the tariff, customer pays the same. Yes, monopolist will still want to sell because they still make profit. They don't take a hit of 250%, their profits are just reduced by ~2.5x. US has famously high drug prices due so cutting edge pharma makes much of its profits there. This is all standard 101 International Economics, Paul Krugman has written the standard textbook for it, it's a fun read.
- herbst 1y ago
  Thanks for the insights! Obviously I am economy noob. > US has famously high drug prices due so cutting edge pharma makes much of its profits there That's still weird to me. Switzerland has a cutting edge pharma market too and health care is affordable.
  - croemer 1y ago
    Too many reasons for a reply here, but overall the common theme is lack of regulation giving pharma more power to play on their patent-derived monopolies. As for Switzerland, it's a small country with an economic model that doesn't scale/generalize. Even in Switzerland there's constant discussion about health care (insurance) being too expensive - though the biggest driver is wages not drug prices.
    - herbst 1y ago
      I am not sure if you read other news but I am not aware of constant discussions when our insurance is comparingly cheaper than for example Austria but we earn 3 times as much.

by herbst 1y ago

croemer 1y ago

A monopolists can set prices however they want (in contrast to competitive supplier of commodities where there's a market price). They want to maximize profits and if marginal cost of sale is negligible (as is the case for patented drugs) the optimal price is determined by the demand curve. The demand curve depends on the price the buyer sees including tariffs. So the price post tariff is the same as the price without tariff. The monopolist absorbs the tariff, customer pays the same. Yes, monopolist will still want to sell because they still make profit. They don't take a hit of 250%, their profits are just reduced by ~2.5x. US has famously high drug prices due so cutting edge pharma makes much of its profits there. This is all standard 101 International Economics, Paul Krugman has written the standard textbook for it, it's a fun read.

herbst 1y ago
Thanks for the insights! Obviously I am economy noob. > US has famously high drug prices due so cutting edge pharma makes much of its profits there That's still weird to me. Switzerland has a cutting edge pharma market too and health care is affordable.
- croemer 1y ago
  Too many reasons for a reply here, but overall the common theme is lack of regulation giving pharma more power to play on their patent-derived monopolies. As for Switzerland, it's a small country with an economic model that doesn't scale/generalize. Even in Switzerland there's constant discussion about health care (insurance) being too expensive - though the biggest driver is wages not drug prices.
  - herbst 1y ago
    I am not sure if you read other news but I am not aware of constant discussions when our insurance is comparingly cheaper than for example Austria but we earn 3 times as much.